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5 ways to monitor your credit reports

Identity theft can cost you thousands of dollars if it goes unnoticed, not to mention dozens of hours cleaning up your credit report and clearing debts owed. To save time and money, it makes good sense to guard -- or at least watch -- your credit reports.

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That said, protections come in several flavors. Some won't do much, other than alert you to unusual activities on your credit report. Others will prevent anyone from accessing your credit report, including other credit bureaus. It all depends on how much you care about convenience versus safety.

Each preventative measure carries its own set of benefits and caveats, so to help you decide, we highlighted the key differences between credit freezes, fraud alerts and various types of credit monitoring.

5 ways to monitor credit reports
Credit freezes
Advantages Disadvantages
Limits access to your credit report.
Credit report remains in lockdown until consumer removes it.
Usually free to identity theft victims, if available in victim's state.
Relatively cheap (approximately $10) for nonvictims in eligible states. Prices vary by state.
Freezes not instantaneous, may take several business days to process.
Don't halt all types of fraudulent activity. A thief could still run up charges on existing accounts.
Depending on state law, you generally must contact each credit bureau to freeze all reports.
Not available in every state.
Consumer must pay to lift freezes to obtain new credit and refreeze.
Fraud alerts
Advantages Disadvantages
They are free.
Let lenders know a thief might have stolen consumer's identity.
No charge to remove them.
Consumer can continue to obtain new credit.
Alerts are automatically sent to all credit bureaus after consumer places fraud alert with one.
Free credit report provided from each of the three credit bureaus after placing initial alert.
Remove consumer from prescreened insurance and credit-offer lists for two years.
Must have suspicion of identity theft to place fraud alert.
Don't require the lender to contact you if someone applies for new credit in your name.
Don't stop lenders from granting credit to an imposter. Fraud alerts merely ask that lenders take extra steps to verify the identity of the person applying for new credit or contact you for permission to extend credit.
An initial alert only lasts 90 days, after which it must be renewed or a request for extended alert, which lasts seven years, must be made.
Might adversely affect ability to rent apartment, obtain employment or obtain instant credit.
-- Posted: Nov. 1, 2006
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